Previously, many bankers and traders said no, insisting that one-off incidents involving theft or cheating in Europe's Emissions Trading System (ETS) were isolated events attributable mostly to the youth of the market. Advocates of a cap-and-trade approach to tackling climate change said that such growing pains are inevitable, but regulators and legitimate market participants would get better at warding off abuses.

But this month's mass theft of E.U. allowances (EUAs) from some national registries has gotten the broader carbon trading community very much up in arms. Many are blasting some nation members of the European Commission for not taking the threat seriously, undermining their case for spreading carbon markets beyond Europe, especially to North America and parts of East Asia.

And some researchers and carbon trading critics are now relishing in saying "I told you so," pointing to the thefts as just the latest example of a rash of scams, fraudulent activity and other criminal abuses.

One team of researchers at Dartmouth College tracking this issue says crime in the carbon markets is indeed growing fast, and that the criminals are getting more adept at stealing lucrative carbon allowances and avoiding detection.

The problem isn't isolated to Europe, they say.

Officials at Transparency International, for instance, say they are investigating bribery cases in the world's largest offsets trading program, the Clean Development Mechanism. And periodic questions concerning the legitimacy of some voluntary carbon offsetting programs in the United States are starting to draw the attention of the Commodity Futures Trading Commission and the Federal Energy Regulatory Commission, observers note.

But nothing on the scale of what has occurred in Europe has ever been reported in the United States to date. Still, carbon exchange operators here say the rise of reports of criminal activity in the markets of Europe has them on the high alert like never before, though they insist U.S. carbon trading systems are much more robust and less easily penetrated than the ETS.

Needed: a single set of standards

"There have been no incidents of any security issues or any irregularities of any kind in our registry," said Jonathan Schrag, president of the office that oversees the Northeast's Regional Greenhouse Gas Initiative, RGGI Inc. The key difference, he says, is that RGGI knows its membership and knows who trades in its market and why.

"Unlike the countries of the European Union, the RGGI participating states use a single registry, administered by RGGI Inc., with a single set of security standards and operating procedures," Schrag added. "That is a core structural difference."

The European Commission seems to be waking up to the seriousness of the problem, announcing last week that spot trading in EUAs would be suspended indefinitely until member governments could prove that their systems were impenetrable. It's too little, too late, say critics, many of whom joke that once all you needed to trade in the ETS was a telephone number.

Last year, Michael Dorsey, a professor of environmental studies at Dartmouth, stirred controversy when a research team he leads found that carbon market crime was spreading as the markets grew and matured. Though the researchers say they are still compiling figures on 2010 incidents, their initial study covering the entire run of Europe's carbon market showed that 90 percent of fraud or theft cases occurred toward the end of 2009.

That study estimated that fraudsters had successfully swindled the ETS of more than $6 billion. Dorsey said it's getting worse because regulators in Europe are not taking the problem seriously, and nothing they have done in response to last week's theft of more than 2 million EUAs straight from accounts assures him that they are moving more aggressively now.